1.1 BACKGROUND OF STUDY
is controversy that small and medium scale business in any country where they
operate play important role in the economic growth and development of that
country or nation and it improves the quality of life of individuals (Ohanemu,
Business organizations anywhere in the
world operates within environments which according to Adidu & Olanye (2006)
is an aggregate of all conditions, events, circumstances and influences that surround
and effect the business organization.
In management, the term “Environment”
does not necessarily mean physical surroundings but, it is used as a total
forces, factors and influences that surround and affect business organizations
as a separate entity as well as other business organizations. This means that
business organizations must interact with those forces that influence its
decisions, directions, actions, size, health, profitability and performance of
the organization as a whole.
Ukaegbu (2004) stated that the
contemporary environment is becoming dynamic and competitive and since business
organizations do not operate in vacuum, they affect and are affected by
environment conditions. Therefore, business organizations irrespective of their
objectives must take into consideration, these environmental opportunities and
constraints. Businesses affect the environment by providing the required goods
and services thereby contributing to the development of the business by
presenting opportunities and threats. One thing to be emphasized at this point
is that, the extent to which managers could identify, evaluate and react to the
environmental forces will have considerable impact on organizational
Kuye, (2004), emphasized that the need to
study business environments is very important considering the fact that
business organizations do not operate in vacuum and an effective management in
complex and dynamic society requires the assessment of strengths and weaknesses
of the organization and the opportunities and threats provided by the
challenges of the external environment, hence for survival and growth,
organizations must cope and adopt to these challenges posed by the ever
changing environment (internal & external) in which managers operate means
that mangers must not only be aware of what constitutes the elements of their
business environment but also should be able to respond to the forces of the
environment which inevitably impinges on the operations of the business
(2006) further stated that the relationship between a business organization and
its host environment can be examined from three strategic ways;
Firstly, the organization can be viewed
as importing various kinds of inputs (resources), such as human resources,
capital, managerial and technical inputs. These inputs are then transformed to
provoke output which takes the form of goods and services. A second approach is
the study of the relationship between the organization and the society. It
focuses on the demands and legitimate rights of different claimants such as
employees, consumers, suppliers, stakeholders, government and the community. A
third approach is to view the organization as operating in an external
environment of opportunities and constraints. Thus no single approach is
sufficient for all times and in all circumstances. They are complementary. The
elements external to the organization affects its performance as well as those
elements within the organizations.
OF THE PROBLEM
effects of environment on organizational performance vary from one situation to
another. The environment suitable for the growth of a particular business may
be hostile to the survival of another business. The problems that necessitated
this research are as follows:
Assess impact of environmental factors that
has the performance of small scale enterprises in Oshimili North Local
The ability to identify, evaluate and react
to the challenges are critical to organizational performance.
this study seeks to investigate the impact of business environment on
organizational performance of small scale business in Oshimili North Local
OF THE STUDY
purpose of the study is to assess the extent to which environmental factor
affects the performance of small business enterprises, evaluate it, determine
its success and failure and discuss its likely effects on organizational
survival and growth. The other objectives this research seeks to achieve are:
To determine the extent to which
environmental factors affect organizational growth and survival of small scale
To determine the relationship existing
between small scale business and its operating environments.
To determine the challenges facing small
scale businesses within Oshilimi North Local Government Area.
To examine how small scale business manage
these environmental factors.
order to arrive at a precise answer to the effect of environmental factors on
the performance of small scale businesses, the following research questions
shall be tested;
i To what extent do environmental factors
affect growth and survival of small scale businesses.
ii. Is there a relationship existing between
small scale business and its operating environment.
iii. What are the challenges facing small
businesses within Oshimili South Local Government Areas.
iv. How do small scale businesses manage these
What are the available incentives provided
by the government to support small scale businesses?
The following formulated hypothesis would
be tested in order to help provide answers to the research questions;
There is no significant relationship between external environment factors and
performance of small scale business.
H1: There is significant relationship between external environment
factors and performance of small scale business.
2. H0: There is no significant relationship between
increased productivity of small business and socio-cultural factors within the
business environment where it operates.
H1: There is significant relationship between increased productivity of
small business and socio-cultural factors within the business environment where
3. H0: There is no significant relationship between
the fiscal incentives provided by the government, and enhanced performance of
H1: There is significant relationship between the fiscal incentives
provided by the government, and enhanced performance of small business.
1.6 SIGNIFICANCE OF THE STUDY
study will be highly useful after its completion for both current and future
entrepreneurs, business organizations and the government. This research study
on the effects of environment factors on performance of small scale business in
Oshimili North Local Government Area would have considerable benefits on the
small scale business operating within this business environment in that it
Help these businesses become sensitive to
the uncontrollable external environmental factors impinging on the performance
of their businesses and how they can effectively manage these factors and top
the opportunities for enhanced productivity and profitability.
an entrepreneur: The knowledge obtained from this study
will enable them to know how critical environmental factors are and how to
effectively manage these factors for the survival and growth of small scale
organizations and the society: The study will equally
be useful to organization and the society at large in the sense that knowledge
about technological advancement generation through small scale business source
of credit facilities to establish small business will be acquired.
This research will also be useful to the government in the formulation of
policies towards small scale enterprises development in Nigeria. It will also
help the government to identify the importance of small scale enterprises in
the achievement of economic growth and development in Nigeria.
OF THE STUDY
This study covers environmental factors
and its effects on the performance of small scale businesses in Oshimili North
Local Government Area. The study basically focused on the challenges of these
businesses managing the dynamic nature of their business environment in
achieving organizational performance.
OF THE STUDY
However, there were some constraints that
impinged on the research, these are;
1. Financial constraint: The cost of sourcing
information and administering questions was quite on the high side, which
included visiting various small businesses in the various towns that made up
the local government.
limited time frame given to achieve the research was also a constraint to the
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Ohanemu. C. (2004) The Complete entrepreneur: Managing the small scale industry.
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